CleanTech Post-Cop26 - The Breakthrough Agenda

A plan to coordinate the global introduction of clean technologies in order to rapidly drive down their cost has been agreed at the Cop26 summit by world leaders representing two-thirds of the world’s economy.

More than 40 nations said they would align standards and coordinate investments to speed up production and bring forward the “tipping point” at which green technologies are more affordable and accessible than fossil-fuelled alternatives. At that point, the green transition and cuts in climate emissions accelerate rapidly towards a net zero economy.

Among the countries signed up to the Breakthrough Agenda are the UK, US, China, India, the EU and Australia. The first five breakthroughs will be clean electricity, electric vehicles, green steel, hydrogen and sustainable farming. The aim is to make these affordable and available to all nations by 2030 and create 20m new jobs.

Green Grids Initiative

New plans include a global electricity initiative launched by the UK and India and endorsed by 80 nations. The Green Grids Initiative aims to mobilise political will and finance to create international supergrids on all continents and to link up sunny deserts and windy coasts with population centres. By connecting many locations, supergrids are key to providing reliable electricity from renewable energy that may be locally intermittent.

Global Energy Alliance for People & Planet

Another new initiative is the Global Energy Alliance for People & Planet, which is focused on producing clean electricity across the global south. It has an initial $10bn from the World Bank, Rockefeller Foundation, Bezos Earth Fund and others. UK and Scandinavian pension funds also announced on Tuesday they would invest $130bn in clean energy by 2030.

VC in CleanTech

All of this arrives hot on the heels of renewed interest and investment in this sector. Venture capital money is flooding back into clean tech companies a decade after the “mini green bubble” saw private financing for the sector dry up. More than $40bn of VC money has poured into climate tech companies from January 2020 to August 2021, already exceeding the total for the previous two years by 37 per cent.

But crucially, Silicon Valley has changed its investment strategy. It is no longer opting for capital intensive renewable energy projects with high upfront costs. Instead, it is opting for smaller companies with niche products from new battery storage technologies to lab-grown meat, low-carbon concrete and sustainable aviation fuel.

The private sector is involved in the Breakthrough Agenda with a “first movers coalition” of 25 global companies committing to buy emerging clean technologies in sectors such as steel, trucking, shipping, aviation and concrete. Firms are expected to include the shipping company Maersk and the cement maker Holcim.

The Economics of Energy Innovation and System Transition report was produced by experts from the UK, EU, Brazil, China, and India.

“The policies that drove major breakthroughs in low-carbon technologies like wind and solar, were challenged by traditional economic advice, which ignored the role of innovation [in reducing costs] and framed climate policy as costly,” said Prof Michael Grubb, at University College London and a co-author of the report. “We need to learn from these successes.”

Prof Nicholas Stern, at the London School of Economics, said last week that most economists had badly underestimated the speed at which the costs of clean technologies fall and failed to take account of the “immense risks and potential loss of life” that could occur as a result of the climate crisis.

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